If you’re preparing to set up a Bitcoin wallet, this guide will help you to determine which is the best Bitcoin wallet option for you.
In this guide, you’ll discover:
– The differences between Bitcoin wallet types
– The pros and cons of different wallets
– Which type of Bitcoin wallet is the safest place to store your cryptocurrency and why
You might already know that the best place to store your Bitcoin and other cryptocurrencies is NOT on the exchange of which you bought them (for security reasons) — but did you know there are five different types of cryptocurrency wallets?
These wallet types also contain different brands and products, all of which have advantages and disadvantages — it’s no wonder choosing a place to store your Bitcoin and cryptocurrency can seem confusing, right?!
So, to put an end to your confusion, read on to find out which is the best Bitcoin wallet for you.
Cryptocurrency Wallet Types
Let’s begin by addressing each of the 5 types of Bitcoin wallets, shall we?
As their name suggests, web wallets are operated within a web browser.
There isn’t an official definition for the term, ‘web wallet’, so you may find that some people class exchange wallets as web wallets, too.
Exchange wallets, like the ones you find on centralized exchanges such as Binance and Bittrex, however, are not safe. Under no circumstances should you store an amount you cannot afford to lose on a centralized exchange. This is because your funds would be made vulnerable if the exchange was to be hacked, seeing as the exchange is storing your private keys on its centralized servers.
With that warning out of the way, you should know that web wallets can also be called, ‘online wallets’. They are easy to use, and typically free. You simply visit the wallet’s website, input your private key (that you created using the site), and you’re done. From there, you can send Bitcoin from your address, and see an up-to-date balance of the Bitcoin you own.
The major disadvantage that web wallets carry is the fact that you can access them by entering your private key into the website. This makes the user vulnerable to phishing websites, in which fraudsters will create websites with similar URLs to the official wallet website, and hope that you input your private key on their website instead. Then, the fraudsters can take your private key and access your funds.
Sometimes, phishing websites actually replace the official wallet website, as the result of a hack. The bottom line: if you’re using a web wallet, be extremely cautious and take any extra security measures recommended by the official wallet provider.
Software wallets are downloadable wallets, available on desktop and/or mobile operating systems. Their main function and most valued feature is the ease-of-access. Software wallets are generally considered to be hot storage as they are regularly or continuously connected to the internet. This means that whenever you use a software wallet you’re essentially making a compromise between convenience and security.
Whilst software wallets increasingly offer cold storage options, you should never store all of your Bitcoin keys in software wallets.
Another major benefit of software wallets is that you can often use them in conjunction with cryptocurrency exchanges, eg. Jaxx’s partnership with Shapeshift or the Coinbase software wallet. This makes it easier for the regular user to swap their tokens for other ones and maintain all of their wallets in the same place, without having to go through the steps they would with a hardware wallet!
Typically compatible with Windows, Mac and Linux, desktop Bitcoin wallets are for PCs and laptops.
They offer a higher level of security than web wallets, as with software wallets, your private keys are (normally) stored within the wallet itself. To access the private key, most software wallets will require you to be using your device and to enter your password.
This is great for the protection side of things, however, if you want to have constant access to your cryptocurrency, using a desktop wallet might be a little awkward, as you have to have access to your device to be able to use it. If you’re out and don’t have your PC/laptop with you, you won’t be able to access your funds, as they are inaccessible from other devices.
Not only that, but if your computer gets hacked, or your computer hard drive crashes, you could lose all of your cryptocurrency. So, while software wallets are typically safer than web wallets, they still have vulnerabilities.
To overcome this, some people use a laptop that does not ever have a connection with the internet other than to download the wallet and transfer cryptocurrency. This way, there is little chance of a hacker accessing your private key, as your wallet is, for the most part, kept offline.
Wallets that aren’t connected to the internet are known as cold-storage wallets, as your private keys are stored offline.
A mobile wallet is an app that you can download to your smartphone.
A mobile wallet is the best Bitcoin wallet for you if you’re looking for a wallet that is highly
convenient, as it is easy to access (you simply open an app on your phone) and suitable for beginners. They’re great if you want to make on-the-go purchasing using cryptocurrency!
They offer better security than web wallets, but as it’s stored on a device you perhaps carry with you everywhere you go, you should understand the risks it presents.
Losing your phone is common, and if you lose your phone it’s hard to recover your mobile wallet and the Bitcoin it contains. It is possible, but you’ll need your seed phrase or private key. If you don’t have either of these stored safely somewhere, you won’t be able to recover your funds.
That being said, if your phone is stolen, most mobile wallets make it incredibly difficult for thieves to gain access to your funds. They’ll often need to enter a pin or password to get into your wallet, and they can only attempt that if they can actually get into your phone itself! For this reason, it’s important you use a secure pin for your phone, and not just the year of your birth or something else that might be predictable.
Hardware wallets are external devices (normally coming with a USB connection) that store your private keys in a super encrypted format. In fact, they are often seen as the best Bitcoin wallet available in terms of security.
As they are external devices, your private keys are stored offline. (Again, wallets that store your private keys offline can also be referred to as cold-storage wallets).
Hardware wallets work by generating private keys on the hardware wallet itself, so they don’t reveal the private key to the internet. Even when you send Bitcoin from your hardware wallet, the private key does not leave the wallet. As soon as it is unplugged, there is no trace of the private key left anywhere on the internet or the laptop/PC you plugged it into.
They are fairly easy to use and set up, and often come with additional built-in security features, such as password or pin protection.
Even people who aren’t confident in setting up new pieces of technology by themselves should have no issues, as the instruction manuals included with the best hardware wallets available are very straightforward written as simply as possible.
For those who need further assistance, you can always ask away in our comments section — we’d be glad to help.
The biggest drawback to using a hardware wallet to store your cryptocurrency is the cost of purchasing one — they are one of the most expensive storage options. They typically range from $70-140.
They are also small, and due to their size (which is similar to that of a small USB drive), loss, theft, and accidental damage are the primary risks associated with using one.
A paper wallet is the simplest of all wallets to set up and use — it’s simply a QR code that you are able to print yourself. This code contains your cryptocurrency address and private key.
The advantage of using a paper wallet is that it is a cold-storage wallet, seeing as your keys are stored offline. The disadvantages, though, include it being made out of paper (thus, at risk to fire and other forms of damage) and containing no protection other than the fact it is offline. I mean, you can’t exactly put a password on a piece of paper, can you?
Which Type Of Wallet Is Best?
As mentioned earlier, you should always store your cryptocurrency in a wallet that only you have access to and not one that is stored on an exchange. Exchanges can get hacked or put at risk, and do not allow for full control of your Bitcoin and cryptocurrency. Having your own wallet instead, however, means that you are in control of your money (as it is you that stores your private key) and are generally at much less risk.
To ensure your cryptocurrency is protected as much as possible, we recommend hardware wallets as the best Bitcoin wallet option. Due to their internal hardware chip preventing your private key from being shared when transferring your Bitcoin, they are the safest form of Bitcoin storage available. Also, of all cold-storage options, hardware wallets are often the most resistant to damage.
So, if your priority is security, we highly recommend a hardware wallet.
You now know about the different types of wallets, but now, let’s take a look at (and compare) some of the best Bitcoin wallets available. Continue reading to find out which is the best Bitcoin wallet for you.
A Comparison Of The Best Bitcoin Wallets
Exodus Software Wallet
Exodus is a desktop-based wallet, which is an all-in-one solution for holding and purchasing different types of cryptocurrency. Exodus is designed to be simple and straightforward to use — its interface was built with user-friendliness in mind.
As well as offering an intuitive, modern interface, it also provides the ability to ‘convert’ your cryptocurrencies into another cryptocurrency. This is possible using a third-party service known as Shapeshift. Right from your Exodus wallet, you can submit your Bitcoin to Shapeshift to be exchanged for a number of different cryptocurrencies. As soon as the exchange/conversion is complete, the new funds appear in your Exodus wallet.
Exodus is by far the most beginner-friendly and visually-pleasing desktop wallet we have tested.
Pros of Exodus Wallet
- Integrated exchange meaning you can purchase other cryptocurrencies from within your wallet safely and securely
- Can hold different types of cryptocurrencies in one wallet
- Live charts, enabling you to quickly see at a glance your cryptocurrency holdings and percentages of each currency you hold.
- Free to use
Cons of Exodus Wallet
- No mobile app currently available
- The exchange rates for trading cryptocurrencies on Shapeshift aren’t as good as the prices you can get on regular, peer-to-peer exchanges (such as Binance)
- If your device is hacked and infected, your funds can be hijacked
Where To Purchase Exodus Wallet
It’s easy to get your Exodus wallet. Go here to get yours.
You simply click the ‘download’ button at the top of the page, and choose your operating system. It’ll then download directly to your PC/laptop, from which you can run the installation. From there, just follow the on-screen instructions!
Ledger Nano S Hardware Wallet
Possibly the most popular hardware wallet option, the Ledger Nano S is a product of the French tech-security company, Ledger. They take great pride in offering some of the best security solutions around, and the Ledger Nano S is a prime example of this.
With a number of safety measures in place, and a wide range of cryptocurrencies supported (including Bitcoin, Ethereum and NEO) the Ledger Nano S is great for anyone wanting to treat their crypto holdings with the best security available.
(Other popular hardware wallet options include the Trezor wallet. See our Trezor vs. Ledger guide for a full comparison).
Pros of the Ledger Nano S
- Strong security features, malware-proof
- Compact and portable
- Connects to any computer or laptop
- Compatible with a wide range of cryptocurrencies
Cons of the Ledger Nano S
- As it is small, it is prone to being lost if not stored carefully
- It costs around $100 (this isn’t much of a con, however, as it may be a small price to pay to protect your funds, depending on how much you’re storing)
Where To Purchase A Ledger Nano S
Always buy your Ledger directly from their official website, rather than from a third-party site, and never buy a used Ledger from an auction site or similar, even if it claims to have been refurbished. Even though the Nano S is allegedly ‘tamper-proof’, purchasing it straight from the source will reassure you further.
Jaxx Software Wallet (Desktop & Mobile)
Founded in 2014 by Ethereum co-founder Anthony Diiorio, Jaxx is a software wallet available as both a desktop and mobile app. Out of all mobile wallets available, this is the one we would recommend the most.
Alike Exodus, Jaxx has Shapeshift integrated to it!
So, if you’re looking for optimal convenience, this is perhaps the wallet for you. However, if you’re looking to hold your cryptocurrency for a long period of time without trading it, we’d advise using a hardware wallet.
Pros of the Jaxx Wallet
- Free to use
- Easy to set up
- Can be used on both mobile and desktop, enabling highly convenient use
- In-app exchange using the Shapeshift platform, meaning you can trade certain cryptocurrencies almost instantly without having to exit the app
- User-friendly interface
Cons of the Jaxx Wallet
- Some users report that it can be slow to use
- If your device is hacked and infected, your cryptocurrency is vulnerable
Where To Purchase Jaxx
Visit the Jaxx site to download the Jaxx wallet. Choose your mobile operating system (iOS or Android) and click ‘download’ to get started. You can also find Jaxx on the Apple App Store and the Google Play Store.
Launched in November of 2011, the Electrum wallet is one of the veterans of sector and a founding father software wallet. It’s a lightweight Bitcoin client, which means that it interacts with Bitcoin’s network without users having to download the blockchain by running a full node. For this reason, the Electrum is sometimes referred to as a light node wallet.
Pros of the Electrum Wallet
- Widely used and so compatible with numerous exchanges
- Very fast and easy to set up
- Good privacy features
- Integrates readily with hardware wallets for added layer of security
Cons of the Electrum Wallet
- Relatively complicated to use so not necessarily ideal for beginners
- Only supports Bitcoin
Where To Purchase the Electrum Wallet
Go to the Electrum homesite and download the latest version. Next, you’ll need to Run the file to launch Electrum installer. Once installation is complete, click the Electrum icon on your desktop and select Standard wallet, before setting up seed access and encryption options. As I said above, setup can be tricky and won’t be easy for every user, especially beginners. Sorry, Newbies!
Trezor One Hardware Wallet
The Big Daddy of hardware wallets is Trezor One, a battle-hardened piece of kit that supports a wide variety of cryptocurrencies, including Bitcoin, at a pretty affordable price.
Satoshi Labs is the company behind the Trezor One and is considered a pioneer in the blockchain industry. Trezor one has some seriously beefy security measures such as PIN codes and passphrases which make it as close to “hack proof” as you can get.
Pros of the Trezor One
- Practically unhackable. This thing’s like Fort Knox!
- It’s easy to set up and use, offering simple functions and controls which make handling your Bitcoin safely a stress-free experience.
Cons of the Trezor One
- Cheap for a hardware wallet but it ain’t free! Be prepared to part with around 100 USD to get your hands on this blockchain beast.
- No seed phrasing backup and as it’s a physical device, once you lose it, your Bitcoin gets lost with it!
Where To Purchase the Trezor One
Further Advice On Choosing The Best Bitcoin Wallet
Now you’ve read our Best Bitcoin Wallet guide, you can make an educated choice about the best wallet to safely store your Bitcoin. There is no single correct answer, though, as it differs from person to person depending on their needs.
If you prioritize safety above all else, you might wish to opt for the hardware wallet, but if you wish to be able to use and transfer your cryptocurrency easily, you might want to opt for a mobile or desktop wallet.
More often than not, the best choice of wallet to store your cryptocurrency might not be one single wallet, but rather a combination of multiple types. The best Bitcoin wallet is often more than one Bitcoin wallet!
For example, you may wish to store the majority of your Bitcoin on a hardware wallet for safekeeping, and store the rest in a desktop or mobile wallet for quick access.
As we come to the end of our Best Bitcoin Wallet guide, we hope that it has helped you to decide which is the best Bitcoin wallet for you. If it has, let us know which you decided to go with! Also, if you need further assistance, feel free to ask away! We’ll always be happy to help.